jeudi 1 janvier 2015
This Could Be A 'Big Deal' For Faster EUR Decline - Nomura
Posted on 18:22 by nice news
Every quarter the IMF puts out a snapshot of global central bank reserve composition (with a quarter lag), and this week we got the Q3 numbers which seem to signal a shift in central bank behavior, notes Nomura.
Normally, central banks operate with fairly fixed currency allocation targets, and when a currency goes down in value, they accumulate, to stabilize its share. In Q3, the Euro dropped sharply vs the dollar, but both G10 and EM central banks were on the margin active sellers of Euro’s," Nomura explains.
"According to IMF COFER data published today, the Euro share of global reserves dropped 1.5 percentage points to 22.6%. This is one of the largest quarterly declines in the share ever," Nomura clarifies.
"This is a big deal, as it suggest ‘portfolio rebalancing’ has been put on hold. This means that stabilizing flows, which could have been in the region $100bn, are not materializing," Nomura argues.
"If this is indeed the new trend, there may be potential for a faster move lower in the Euro in early 2015, driven more purely by private sector flows," Nomura projects.
Normally, central banks operate with fairly fixed currency allocation targets, and when a currency goes down in value, they accumulate, to stabilize its share. In Q3, the Euro dropped sharply vs the dollar, but both G10 and EM central banks were on the margin active sellers of Euro’s," Nomura explains.
"According to IMF COFER data published today, the Euro share of global reserves dropped 1.5 percentage points to 22.6%. This is one of the largest quarterly declines in the share ever," Nomura clarifies.
"This is a big deal, as it suggest ‘portfolio rebalancing’ has been put on hold. This means that stabilizing flows, which could have been in the region $100bn, are not materializing," Nomura argues.
"If this is indeed the new trend, there may be potential for a faster move lower in the Euro in early 2015, driven more purely by private sector flows," Nomura projects.
This Could Be A 'Big Deal' For Faster EUR Decline - Nomura
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